Cayman’s economic model has not fully benefited Caymanians and could have yielded more improvements to the quality of life, panelists at the last week’s Fidelity Cayman Economic Outlook conference heard.
Speaking at a panel discussion at the conference on Thursday, Paul Byles, economist and CEO of First Regents Bank, said, “The Cayman model has benefited Caymanians but it is somewhat unfortunate that it has not benefited Caymanians as much as it could have.” He pointed to a large gap between rich and poor, highlighted by the National Assessment of Living Conditions many years ago, and a shrinking middle class as indications that the current system has not brought the maximum benefits and more should be done to grow the Caymanian middle class.
“We can do a better job of preparing Caymanians to participate at a higher level in the key industries where the average income is clearly higher,” Mr. Byles said. In particular, he said, Caymanians should be introduced to the financial services industry at an early age by going into the schools and introducing students to the jobs that are available and what kind of education is needed to fill them.
Tom McCallum, business coach and CEO of Shirlaws, emphasized the importance of making an educational impact on young people at a very early age, whether it is to foster an entrepreneurial spirit or to familiarize children with the opportunities in the developing healthcare sector around Health City Cayman Islands.
Panelists identified education as the key issue and key threat for Caymanian participation in a successful economic model.
Asked about the implications of a public school system that does not allow Caymanians and expatriates to grow up and be educated together, Roy Tatum, senior political advisor to the premier, said: “I think it has been horrendous.” He stated his two daughters attended private school St. Ignatius and had Caymanian and expat friends and all would be missing something without this experience. “I am hoping that is something we can change [for the public schools].”
The panel discussion, which raised the question whether the economic system had served Caymanians well, concluded that the model has been very successful but it has not impacted everyone.
Ingrid Pierce, global managing partner at Walkers, said Cayman’s model is not broken “but it is dented.” Huge strides had been made and no other Caribbean country could even come close to what Cayman has achieved, she noted. But she agreed that people may feel disenfranchised, given that Cayman – a successful, leading financial center – only employs 6,000 people in financial services. “That’s where we get to the disconnect between ‘it’s a great model and it works very well’ but not for everybody. There are a lot of people in society that it does not work for,” she said.
The share of unemployed Caymanians that has hovered around the 10 percent mark since the financial crisis is often cited as a sign that the growth of the main industry sectors bypasses parts of Cayman’s society.
According to Mr. Byles, reducing Caymanian unemployment is hampered by trying to find a single solution for what is in fact caused by multiple reasons, ranging from unfair hiring practices to inadequate preparation of the people looking for jobs.
Some politicians only like to play one tune that works well for certain people, he said. “And this tune basically says: ‘It’s somebody else’s fault.’ I am not saying that there is something completely wrong with that tune. I am saying it is not the only song to sing.”
As a result, the approach to bringing down unemployment was too lopsided. Cayman’s problem is not a lack of jobs. In fact, Cayman is one of the few countries in the world that creates more jobs than needed for its population size, he argued.
“The work permit system tells us exactly what this economy demands every year for the past 40 years. We know exactly what it needs: this number of carpenters, this number of masons, it needs this many lawyers, this many accountants.
“An opportunity has been missed in the past decades to plan better so that Caymanians can benefit more from the current model. I am not being negative. This is a great country and we have been doing well, but how can we get the quality of life to improve by using this advantage?” he asked.
At the same time, Mr. Byles said, being pro-growth will always also mean more foreign workers. Policymakers who feel that this creates an imbalance in society and instead want to “turn back the economy” will “turn it back for everybody.” Policymakers should ask themselves whether they are more concerned about the visual that more jobs for Caymanians will lead to an influx of foreign workers or whether they are concerned about the absolute benefit they create for Caymanians.
Mr. McCallum said the foundation of the Cayman model was laid in the 1970s and 1980s with opportunistic initiatives by agile and innovative people. However, “we have stopped being agile,” he said. Cayman has grown to a level of complexity that is difficult to manage and the agility that was at the heart of the Cayman’s economic system has to be reactivated by moving away from a command and control style of governance to a more adaptive system.